Why Is Bosch’s Dresden Wafer Fab So Important?

Deepangshu Dev Sarmah

Deepangshu Dev Sarmah

8 Jun 2021
01:00 PM
4 Min Read

Semiconductors are a core technology for Bosch, and it has invested over € 2.5 billion in its wafer fabs in Reutlingen and Dresden alone, highlighting their strategic importance.

AI at the Bosch semiconductor plant in Reutlingen, Germany

The Dresden Wafer Fab that Bosch inaugurated on June 7, 2021 is an important development at various levels. One, this is the company’s first AIoT facility; two, at roughly € 1 billion, this new facility is the biggest single investment in Bosch’s more than 130-year history. 

Thirdly, and probably most importantly, this new facility comes at a time when the world is reeling under a severe semiconductor crisis that has turned automotive production plans on its head. 

While the automotive industry was the first major industrial sector to report and suffer from the chip shortage, the crisis seems to be deepening across other technology areas that rely heavily on semiconductor chips (microprocessors) – smartphones, tablets and personal computers. 

The US, led by Intel, continues to be the largest producer of semiconductors worldwide. In fact, based on their total revenue in 2020, seven of the top 10 semiconductor players in the world are from the US. 

In one of its studies in 2020 on the semiconductor industry in the Asia Pacific, Deloitte had reported that China, Japan, South Korea and Taiwan together have become the ‘Big 4’ semiconductor players in the Asia Pacific region. In fact, Asia Pacific is the world’s biggest market for semiconductors, accounting for 60% of global semiconductor sales, within which China alone accounts for over 30%. 

The new Bosch wafer fab at Dresden, Germany

In such a scenario, the new Bosch facility is a major development. It is not for nothing that Margrethe Vestager, Vice President, EU Commission said at the Dresden facility inauguration that semiconductors will help strengthen Europe’s competitiveness as a cradle for cutting-edge innovations.

Bosch’s first AIoT factory

The Dresden facility is being billed one of the world’s most modern wafer fabs. The factory is highly automated with fully connected machines and integrated processes, which combined with artificial intelligence (AI) will make the plant one of the trailblazers in Industry 4.0, the company has claimed. 

This is Bosch’s first AIoT factory, one that is fully connected, data-driven, and self-optimising right from the start. 

As the name suggests, AIoT is the Artificial Intelligence of Things (AIoT) – a combination of artificial intelligence (AI) technologies with the Internet of Things (IoT) infrastructure. AIoT helps in achieving more efficient IoT operations, improve human-machine interactions and enhance data management and analytics. 

Dr Volkmar Denner, Chairman of the Board of Management, Robert Bosch GmbH.

For Dr Volkmar Denner, Chairman of the Board of Management, Robert Bosch GmbH, the Dresden wafer fab is a critical investment. Semiconductors are a core technology for Bosch, and it is strategically important for the company to develop and manufacture them, he said at the inauguration. 

In the context of the current global semiconductor crisis, this investment can be considered extremely crucial and timely for the company.

The company has invested more than € 2.5 billion in its wafer fabs in Reutlingen and Dresden alone. On top of this, billions of euros have been invested in developing microelectronics. In this way, the company is continuing to pursue its growth strategy in semiconductor development and manufacturing.

Wafer fabrication is a procedure used to produce complete electrical or photonic circuits on semiconductor wafers. The use of artificial intelligence (AI) will create a sound basis for data-driven, continuous improvement in production, as well as for fast production rollouts. 

Bosch's semiconductor portfolio.

At the Dresden wafer fab, glasses have built-in cameras and machines can think for themselves, and maintenance work can be managed from 9,000 km away. All the data in the wafer fab – from machinery, sensors, and products – is collected in a central database. Collectively, production data equivalent to 500 pages of text is generated every second, which would be equivalent to more than 42 million pages on a single day, said Bosch.

AI methods are then used to evaluate this data, while self-optimising algorithms learn how to make predictions on the basis of the data. AI also helps real-time analysis of manufacturing and maintenance processes. An AI algorithm, for instance, can detect even the tiniest anomalies on the wafer surface in the form of specific error patterns known as signatures. Their causes are immediately analysed and deviations from the process corrected without delay, even before they can affect the reliability of the product, the company has claimed. 

Moreover, AI algorithms can precisely predict whether and when a piece of manufacturing machinery or a robot needs maintenance or adjustment. 

There are two Dresden wafer fabs – one in the real world, and one in the digital world. 

The Dresden facility has been built using a “digital twin”, where all parts of the factory and all relevant construction data relating to the plant were recorded digitally and visualised in a 3D model before its actual construction. 

The plant also makes use of data glasses and augmented reality to allow maintenance work remotely. Cameras built into data glasses transmit images half way around the world, from where the experts can talk to the associate through the maintenance process in real time. 

What’s the future of semiconductors?

Every technical device in the world today runs on semiconductor chips or microprocessors. And their presence would continue to increase in both numbers and value terms. 

With the increasing use of semiconductors in vehicles, the market for AI-related semiconductors will grow in revenue to more than $30 billion by 2022 at an annual growth rate of nearly 50%, PwC has said in one of its reports. The report further said the adoption of AI-driven use cases will likely be determined by the size of investment in the technology, the pace of its development and the speed at which its benefits are realised.

MEMS sensors by Bosch

Bosch’s investment, hence, is not just timely but strategic from a future growth perspective. Take for example its growth in chips over the past few years. In 2016, every new vehicle worldwide had an average of more than nine Bosch chips on board, in devices such as the airbag control unit, the braking system, and the park assist system. This grew to over 17 in 2019, indicating a rapid uptake in chip usage and demand. 

This is only likely to increase hereon, considering the increased focus on driver assistance systems, infotainment and electrification of the powertrain – not just in the mature markets of North America, Europe, Japan, China or Korea, but also in developing markets such as India. 

Even in terms of value, the share of microelectronics in a new vehicle has grown € 120 in 1998 to € 500 in 2018, as per ZVEI, the German Electrical and Electronic Manufacturers' Association. The forecast is for this to grow to € 600 by 2023, clearly indicating a strong growth area for Bosch as well. 

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